Developed market or developing market?

A perspective of institutional theory on multinational enterprises’ diversification and sustainable development with environmental protection

Ji Li, Ying Zhang, Yanghong Hu (Corresponding Author), Xiaolong Tao, Wanxing Jiang, Lei Qi

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Integrating previous research, we propose a theoretical model predicting the different effects of global diversification on corporate social performance in environmental protection (EP) by focusing on the institutional difference between developing and developed countries. Moreover, arguing for the moderating effects of firm resources, we also predict and test the effect of firm slack resources on the relationship between the diversification and corporate social performance in EP. By analyzing longitudinal data of 847 multinational enterprises (MNEs), we found empirical evidence that when MNEs diversify mainly into developed countries, they are likely to show more EP. By contrast, when MNEs diversify into developing countries, they are likely to show less EP. Furthermore, we found that a firm's financial slack could weaken the positive effect of diversification into developed countries and enhance the negative effect of diversification into developing countries on EP. However, a firm's human resource slack could only weaken the positive effect of diversification into developed countries on EP. We conclude with a discussion of the implications of the findings.

Original languageEnglish
Pages (from-to)858-871
Number of pages14
JournalBusiness Strategy and the Environment
Volume27
Issue number7
Early online date8 Feb 2018
DOIs
Publication statusPublished - Nov 2018

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multinational enterprise
diversification
environmental protection
sustainable development
market
firm
developing world
developing country
human resource
resource
resources
human resources
performance
effect
Institutional theory
Multinational enterprises
Environmental protection
Sustainable development
Diversification
developed country

Keywords

  • developed countries
  • developing countries
  • environmental protection
  • financial slack
  • geographic diversification
  • human resource slack
  • institutional theory
  • multinational enterprises

Cite this

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title = "Developed market or developing market?: A perspective of institutional theory on multinational enterprises’ diversification and sustainable development with environmental protection",
abstract = "Integrating previous research, we propose a theoretical model predicting the different effects of global diversification on corporate social performance in environmental protection (EP) by focusing on the institutional difference between developing and developed countries. Moreover, arguing for the moderating effects of firm resources, we also predict and test the effect of firm slack resources on the relationship between the diversification and corporate social performance in EP. By analyzing longitudinal data of 847 multinational enterprises (MNEs), we found empirical evidence that when MNEs diversify mainly into developed countries, they are likely to show more EP. By contrast, when MNEs diversify into developing countries, they are likely to show less EP. Furthermore, we found that a firm's financial slack could weaken the positive effect of diversification into developed countries and enhance the negative effect of diversification into developing countries on EP. However, a firm's human resource slack could only weaken the positive effect of diversification into developed countries on EP. We conclude with a discussion of the implications of the findings.",
keywords = "developed countries, developing countries, environmental protection, financial slack, geographic diversification, human resource slack, institutional theory, multinational enterprises",
author = "Ji Li and Ying Zhang and Yanghong Hu and Xiaolong Tao and Wanxing Jiang and Lei Qi",
note = "Hong Kong Baptist University. Grant Number: FRG2/14‐15/089",
year = "2018",
month = "11",
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TY - JOUR

T1 - Developed market or developing market?

T2 - A perspective of institutional theory on multinational enterprises’ diversification and sustainable development with environmental protection

AU - Li, Ji

AU - Zhang, Ying

AU - Hu, Yanghong

AU - Tao, Xiaolong

AU - Jiang, Wanxing

AU - Qi, Lei

N1 - Hong Kong Baptist University. Grant Number: FRG2/14‐15/089

PY - 2018/11

Y1 - 2018/11

N2 - Integrating previous research, we propose a theoretical model predicting the different effects of global diversification on corporate social performance in environmental protection (EP) by focusing on the institutional difference between developing and developed countries. Moreover, arguing for the moderating effects of firm resources, we also predict and test the effect of firm slack resources on the relationship between the diversification and corporate social performance in EP. By analyzing longitudinal data of 847 multinational enterprises (MNEs), we found empirical evidence that when MNEs diversify mainly into developed countries, they are likely to show more EP. By contrast, when MNEs diversify into developing countries, they are likely to show less EP. Furthermore, we found that a firm's financial slack could weaken the positive effect of diversification into developed countries and enhance the negative effect of diversification into developing countries on EP. However, a firm's human resource slack could only weaken the positive effect of diversification into developed countries on EP. We conclude with a discussion of the implications of the findings.

AB - Integrating previous research, we propose a theoretical model predicting the different effects of global diversification on corporate social performance in environmental protection (EP) by focusing on the institutional difference between developing and developed countries. Moreover, arguing for the moderating effects of firm resources, we also predict and test the effect of firm slack resources on the relationship between the diversification and corporate social performance in EP. By analyzing longitudinal data of 847 multinational enterprises (MNEs), we found empirical evidence that when MNEs diversify mainly into developed countries, they are likely to show more EP. By contrast, when MNEs diversify into developing countries, they are likely to show less EP. Furthermore, we found that a firm's financial slack could weaken the positive effect of diversification into developed countries and enhance the negative effect of diversification into developing countries on EP. However, a firm's human resource slack could only weaken the positive effect of diversification into developed countries on EP. We conclude with a discussion of the implications of the findings.

KW - developed countries

KW - developing countries

KW - environmental protection

KW - financial slack

KW - geographic diversification

KW - human resource slack

KW - institutional theory

KW - multinational enterprises

U2 - 10.1002/bse.2037

DO - 10.1002/bse.2037

M3 - Article

VL - 27

SP - 858

EP - 871

JO - Business Strategy and the Environment

JF - Business Strategy and the Environment

SN - 0964-4733

IS - 7

ER -